About half the people I know well enough to know about their financial situation are in the same boat as me, which is paying 50% or more of your income towards rent or mortgage. This 30% figure is ideal, but not real. (The other half are lucky enough to be making 6 figures or have family money.)
“Working Poor” has expanded in my adult life to encompass most of the people I would have considered middle class back in the 80s and 90s.
And in these times of stagnant wages, the things that have really gone up in price are those that are bought on credit: single family houses and college degrees. By accident or design, lowering interest rates when incomes are stagnant has simply allowed those selling big-ticket items to raise the prices.
You are a good person. The whole world might be messed up, but with enough of you around we’ll make it out at the other side. You rock!
When first established, minimum wage was designated and implemented as “the minimum wage that a full time employee requires to afford live with all basic amenities” i.e. housing, food, utilities. As inflation and cost of living increased, minimum wage was supposed to also increase to ensure quality of life needs were met for all employed people.
So what happened to that? Congress just voted to give themselves another raise, at the same time voted against raising the national minimum wage.
I can’t say I’m too concerned about the plight of “full time minimum wage workers,” for the same reason I’m not too worried about unicorns.
I’m not saying things aren’t fucked, just that virtually NO low-wage earner these days has a reliable 40-hour-a-week gig. They have a few things that get them 10 here and 15 there, for as long as their luck holds out with the random scheduling.
So actually it’s a lot more fucked even than this. A hypothetical $14,500-aire with a 9-to-5 minimum wage job might have to live in some godawful shack three miles from nowhere, but if somehow they managed the extreme austerity necessary to make the monthly budget balance in spite of all that, they’d at least be able to reliably make the rent. In reality, the ebb and flow of low-wage work hours means keeping to a regular payment schedule is mathematically impossible.
I’m not either, but someone making $150k/yr makes $12.5k/month (about $11k after federal and maybe $10k after state taxes). Buy a $500k house, have a $400k mortgage, and your mortgage costs at current rates are $2k - call it $3k with real estate taxes, insurance, and maybe an HOA fee. Comfortably under 30% of income. I say this as someone who bought a $330k home on $80k annual income.
Edit to add: I agree with the overall point you made though. Housing markets in cities and most suburbs are insane these days, and salary structures are absurd.
Because they are simultaneously scarce, status-symbols, and seen as paths to prosperity (either directly, or as a way to get your kids into better school districts, etc.), people bid up prices. If you haven’t already, check out Elizabeth Warren’s book “The Two Income Trap.”
That’s easy. If I wanted to justify it I’d give the easy economics answer: Wages are set by the market, not by individual employers. Regulation or redistribution is necessary for it to be otherwise.
Yes, I’m aware that in reality many labor markets are effectively monopsonies. I’m also aware that companies like Costco pay more and get enough benefit from greater retention etc. that it’s well worth it for them to do so. I don’t endorse the first part of the easy economics answer in practice, but in a world with sane governance I’d much rather give the poor extra money than set a minimum wage above the market wage for their labor.
Why we need “worker shortages” and wage inflation plus an iron hand directed at these plantation operators who will do everything in their power to stop it.
If you’re willing to do hard nasty work, like Mike Rowe’s dirty jobs - you deserve to live like a king. And afford any damn rental you want.
Thank you. That was the point I was making. And while no someone making 200k isn’t struggling. I’d argue you SHOULD be living high on the hog making that. And they aren’t.
Our entire economy is out of whack compared to 40 years ago.
Take home on 200k is about 10k or so with 4 deductions depending on where you live.
Tally up what it costs to maintain the house, have cars and clothe kids. That ain’t living high, it’s like solid middle class.
Most cities and suburbs these days have zoning and permitting requirements designed to maintain an artificial scarcity of housing.
The economy is booming. Just not for 80%-plus of Americans.
You are justifying the abuse of a human being using an economic model? Well that certainly sets the bar low for acceptable behaviour in a society, doesn’t it? To put a finer point on it, using an economic model as justification for wage slavery is bereft of decency and humanity. One does not model a society of human beings upon the most expedient method of profit taking. That’s a low and frankly debased way to view the world and an even more disgusting way to treat people.
But that’s because you are pretending, without justification, that our wages are set by the market. In fact no, they are not. The minimum wage exists because without those laws, employers would be paying even less. Hunger and the need for shelter are what drives people to work for less than equitable wages not market forces. We created the minimum wage laws so that working people would not live in poverty. So, it should be clear to any objective person that wages are not market but rather society driven and our lawmakers are failing society by allowing wage slave below poverty line incomes for people working 40 hours a week.
Largely be design because it gave rise to an entire industry of usurious enforcement of debts and in the case of car and home lending, brisk business in giving out loans to the same property several times over to different people with loan initiation fees and heavy interest/penalties.
No, I’m not, and I apologize that the rest of my comment didn’t make that clear. That would be the defense I’d give, if I were so inclined.
I agree, in practice the assumptions necessary for a free market to be optimal almost never hold.
I do think I made clear enough that I think the only way to improve things is with coordinated action, almost certainly by regulation. Any individual employee or employer who tries to defect from the current inadequate Nash equilibrium we’re stuck at without ways to force others to come along will usually simply lose, and be destroyed. Market forces are strong enough to do that.
What you actually made clear
Is that you think the people should pay for the indefensible shortfall in employee pay rather than the employer.
Guilty, on that count. If Congress made a law tomorrow that set the minimum wage equal to the local living wage, indexed to automatically go up over time, I’d be thrilled, for two reasons: first, because poor people would have more money, and second, because it would encourage more R&D into automation which will lead to more economic growth over time.
If Congress made a law tomorrow providing a minimum income guarantee - either a wage subsidy, or UBI, at least those are the forms I have seen before - I’d be even more thrilled. First, because it would benefit a greater number of poor people. Second, because it would similarly encourage R&D into automation since it would be harder to convince people to work shitty jobs. Third, because poor people would not be forced to take whatever jobs are on offer, employers would actually have to provide more money or better working conditions to attract workers. And fourth, because people whose financial survival isn’t tied to an employer have more freedom to start businesses, move to new places, care for loved ones, and stand up for their own rights.
I care about the predictable real-world consequences of a policy a lot more than I care about who gets to screw whom under current policy and how just it would be to force them to change. People are often terrible, this has always been true, and I’d much rather find a way forward that works to make things better even though this is true. Your policy proposal leaves such people in a position of power over others. Mine reduces that power.
Have you read this paper? http://www.nber.org/papers/w4509
Wages are depressed, in large part, because of the monopsony power of large employers. It means that there is significant scope for the minimum wage to be increased, without job losses.
Not that paper, but yes, I’ve seen the argument, and I agree with it.
Actually, I think it would be better to have a higher minimum wage (or other means of achieving the same result) even if it did create some job losses. I think there is psychological and social value in society saying, “This is the bar below which we will not let anyone fall,” and actually having that bar be a livable life.
It sure sounded like you were arguing against an across the board minimum wage increase. I guess not.
